Draft Movable Property Security Bill

Detailed Explanatory Notes

February 16, 2018

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TABLE OF CONTENTS

A. Introduction..................................................................................................................................................... 1

B. Executive Summary ......................................................................................................................................... 2

C. The Basic Approach ......................................................................................................................................... 3

D. The Registration System .................................................................................................................................. 4

E. The Priority Structure ...................................................................................................................................... 5

F. Default Rights and Remedies .......................................................................................................................... 5

G. Innovative Features ......................................................................................................................................... 6

H. Repeal or Amendment of Existing Legislation ................................................................................................. 9

Figure 1A: The existing commercial registry process, Georgetown: ...................................................................... 10

Figure 1B: The existing sub-registries – Vreed-en-Hoop & New Amsterdam: ....................................................... 11

Figure 1C: A Centralized Commercial Registry for MPSA Security Interests .......................................................... 12

I. MPSA: Constituent Parts ..................................................................................................................................... 13

Part I: Preliminary.............................................................................................................................................. 13

Part II: Administration ....................................................................................................................................... 14

Part III: Creation of a Security Interest – the security agreement .................................................................... 15

Part IV: Perfection of Security Interests ............................................................................................................ 16

Part V: Security Interests in Movable Property ................................................................................................. 16

Part VI: Priority Between Security Interests ...................................................................................................... 17

Part VII: Special Priority Rules ........................................................................................................................... 17

Part VIII: Registration ....................................................................................................................................... 17

Part IX: Enforcement of Security Interests ........................................................................................................ 18

Part X: General .................................................................................................................................................. 18

Part IX: Repeals and Transitional Provisions ..................................................................................................... 19

J. Core Questions and Relevant Sections: .............................................................................................................. 19

K. Application to Secured Transactions.................................................................................................................. 22

1. A bill of sale securing an interest in a motor vehicle. ............................................................................... 22

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2. A finance lease securing the unpaid purchase price on a vehicle. ........................................................... 24

3. A company charge in a circulating collateral ............................................................................................ 25

4. An “all-asset” debenture pursuant to section 234 of the Companies Act. .............................................. 26

5. Assignment of receivables by way of security and outright transfers of receivables. ............................. 27

L. Conclusion ........................................................................................................................................................... 28

A. INTRODUCTION

Moveable property security law governs the manner in which credit is secured, by providing a creditor with an interest in a debtor's movable property. Modern legal and institutional frameworks for security interests in movable property provide for securing one or more obligations of any type, present or future, determined or determinable, conditional or unconditional, fixed or floating. All movable property assets qualify as collateral in modern frameworks, regardless of item or type. Collateral can consist of a part of or an undivided right in a movable asset; a generic category of movable assets; or all of a debtor’s movable assets.

Modern legal frameworks for security interests rely on technological innovation and in particular, a centralized electronic registry system which contains all records of security interests in movable property. Unlike existing registry systems in Guyana, which publish security interests in The Official Gazette and in local newspapers either before registration (a debenture) or after registration (bills of sale), and the delay that entails, a modern centralized registry operates in real time.

It does so by allowing authorized registrants remote access to the database so that they can actively register their interests directly, without depending upon registry staff to input data. The onus is on the secured creditor – the party who has the most to gain from the registration process - to ensure that the information entered on the system is correct. The Government bears no liability for errors. The public are able to search the database, as passive readers, to obtain information about registered interests without depending upon announcements in The Official Gazette or public newspapers, or a visit to the registry office.

The result is a registry system that is available in real time. It serves as the official source of information for all forms of security interests in movable property, whether they be created under the Companies Act, the Bills of Sale Act, the Livestock (Loans for Development) Act, a finance lease, hire-purchase agreement, conditional sale (retention of title by an unpaid seller), or an assignment of receivables, licences or intellectual property. Provided telecommunications capacity exists, the information is accessible from anywhere in the country.

Integrating all existing forms of secured interests in movable property, whether possessory or non-possessory, into one comprehensive legislative and institutional framework is no easy task. Fortunately, fully-functional legislative models for this task have existed for over fifty years. The principals and policies underlying them are the inspiration for UNCITRAL’s Model Law on Secured Transactions, published in November 2016 and now implemented in many jurisdictions in the world (hereafter the “UNCITRAL Model” or the “Model Law”).1 The

1 UNITED NATIONS, Model Law on Secured Transactions, Vienna, 2016. The Model Law is in turn based on The Uniform Commercial Code, Article 9, (USA) and Canada’s Personal Property

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proposed Moveable Property Security Act ("MPSA") is based on the principles and policies underlying the UNCITRAL model, adapted to Guyana.

The proposed MPSA builds upon existing Guyana law in a manner that integrates, clarifies and modernizes the current regulatory structure. The legislation does not abolish existing security devices, nor does it require secured parties to alter the contractual arrangements through which existing security devices are created. Instead, it provides a uniform set of rules governing them, new processes for publicizing security interests, an expanded list of transactions that must be publicized, a harmonized set of priorities that reflect the existing rules, and it introduces an out-of-court remedy upon default.

Henceforth, the establishment of a centralized electronic registry and accompanying legal framework in Guyana will enhance the security of loans by making the creation, publication, ascertainment of priorities and the enforcement procedures relatively simple and inexpensive. Creditors would be able to determine easily whether assets are encumbered and in the event of default, rapidly seize and dispose of pledged collateral, thereby mitigating their risk of loss.

Thus, a single and simple set of rules for creating security interests in movable property of any nature, for a wide range of obligations, would allow access to credit under much simpler and less costly circumstances to a broader spectrum of the population.

B. EXECUTIVE SUMMARY

The MPSA will provide a modern, integrated legal structure for the regulation of secured loan and credit transactions in Guyana. For the most part, the policies embodied in the MPSA are not major policy changes. They have been part of Guyana's law and practice for many years, in one form of security device or other. The MPSA will express them in a comprehensive, integrated form.

Although the MPSA will not bring dramatic change to the forms of secured financing, it should make the process more efficient and less risky than at present. It will facilitate the creation of a single, centralized electronic database for security interests, with information entered and retrieved directly by secured creditors and other interested parties, without reliance upon Government agencies or registry staff for input and dissemination of security interests. Operating in real time, the proposed legal and institutional framework will provide Guyana with

Security Acts. Article 9 was implemented in all 50 jurisdictions in the US by 1960 and implemented in Canada in various jurisdictions between 1976 (Ontario) and 2000.

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the Caribbean’s most modern legislation dealing with secured transactions. As such, it will promote access to finance for a broader spectrum of borrowers, especially small and medium-sized enterprises, facilitate infrastructure development and offshore investment in the country and prepare the way for the impending expansion of the oil and gas industry.

C. THE BASIC APPROACH

The law of secured transactions in Guyana has evolved in an incremental, unsystematic manner. The rules and procedures for registering security interests in movable property reflect processes designed for a time that precedes the advent of innovations in information technology and modern financing practices. As a result, the current regulatory structure is complex and uncoordinated. Guyana has at a minimum seven statutes that deal directly with secured financing transactions: The Deeds Registry Act, The Bills of Sale Act, The Pledge of Goods Act, The Co-operative Financial Institutions Act, The Agricultural Loans Act, The Livestock (Loans for Development) Act and the encumbrance provisions of The Companies Act. In addition, there is the common law dealing with conditional sales and hire purchase / finance lease agreements.

The MPSA will replace this structure with a single "code" of law that will enable all rights in movable assets, regardless of the type of transaction or terminology used, so long as they are created by agreement and secure payment or performance of an obligation, to be governed by this legal framework. Accordingly, the MPSA will regulate almost all transactions that involve security interests in moveable property and allow for the registration of these transactions in a single, centralized registry.

This unified approach is made possible by the adoption of a single conceptual basis for all moveable property encumbrances: a “security interest”.2

Under existing law consensual encumbrances are created pursuant to a bill of sale, a company charge or mortgage debenture, a finance lease or hire purchase agreement, or a pledge of tangible goods or documents. Each form of secured transaction has its own rules and procedures. For example, some require publication in The Official Gazette and a local newspaper in advance of registration, some require publication after registration, and some do not

2 A security interest is defined in the draft Bill as: a property right in movable property that is created by agreement and secures payment or other performance of an obligation, regardless of whether the parties have denominated it as a security interest and includes, whether or not the interest secures payment or performance of an obligation, the interest of a lessor for a term of more than one year, the right of a seller with retained title, and the interest of a transferee of an account or chattel paper, but it does not include a personal right against a guarantor or other person liable for the payment of the secured obligation.

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require registration. Each has its own rules for remedies upon default, and priority amongst claimants competing over the same assets is not always clear. Dilatory defences and frivolous claims can greatly increase the time before disposition of assets and consequently, greatly depreciate their value.

In contrast, under the proposed MPSA all consensual agreements that secure payment or performance of an obligation are considered "security agreements." A security agreement, whatever its form - whether a bill of sale, company charge, mortgage debenture, long-term lease or pledge of tangible goods or documents - creates a "security interest", and all security interests are governed by a single consistent set of regulatory measures which specify registration or possession requirements, priority rules and default remedies for all secured transactions in moveable property.

D. THE REGISTRATION SYSTEM

Under the MPSA, public notice of all secured transactions will be registered in a single, centralized electronic database, housed at the Commercial Registry. This registration system will be much simpler and more efficient than the present systems, with direct registration, amendment and cancellation of security interests by authorized registrants. Search capacity will be available to anyone. As a result, the new procedure will facilitate both registration of financing agreements and retrieval of information, in real time. In addition, with the planned technical improvements to the Commercial Registry’s operations, the new system will provide for remote registration and remote searches.

Rather than lodging the security agreement itself, lenders will simply enter a notice of such agreement in the registry system database. This “initial notice” sets out essential details of the transaction including the names and addresses of both the debtor and the secured party, the class of collateral covered by the security interest and the length of period of registration. The information required in an initial notice is substantively similar to the content of the current notices of charges, mortgage debentures and bills of sale published in The Official Gazette.

An initial notice can be lodged prior to execution of the security agreement, thus avoiding delays in the lending process. Advance registration, in this sense, is comparable to advance publication of mortgage debentures in The Official Gazette. More than one security agreement may be lodged through a single financing statement. This will facilitate multi-form transactions such as the financing of inventory. An “amendment notice” is lodged to amend information on the database or cancel a registration. Additionally, debtors will be given greater protection by the requirement that registrations be discharged once the debt is satisfied.

Within the Moveable Property Registry, recorded information on all current registrations against a particular debtor or against a serial-numbered item of property will be available through a single registry search. The comprehensiveness of registration information will provide a better basis upon which to assess the risk of lending and will enhance third party protection by advising enquirers of the existence of a security agreement, to be ignored at the

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enquirer's peril. As mentioned above, computerization of the registry will ensure ready access to real time information, by remote search.

E. THE PRIORITY STRUCTURE

The MPSA will establish an inclusive set of rules governing priorities among all types of security interests. The general rule for determining priority amongst claimants competing for the same assets is comparable to the current rule: priority between competing interests is determined on a "first to publicize" basis. There are also a number of itemized priority rules which govern specialized situations where the general rule would have inappropriate consequences.

For example, subsequent lenders such as finance lessors and unpaid sellers who retain title, along with other parties who provide purchase money, are granted first priority to the unpaid claim in respect of the goods, including priority over a lead lender with an all-asset debenture that contains an after-acquired property clause. This "purchase money security interest" ("PMSI") exception to the general priority rules prevents creation of a situational monopoly by a provision in a lead lender's debenture that all property acquired after advancing the loan also becomes part of the security for such loan. Functionally, a PMSI has the same priority that a bill of sale or finance lease currently has vis-á-vis prior fixed and floating charges.

Competing claims will be resolved through priority provisions in the MPSA, thereby facilitating integration of a variety of forms of secured transactions without reference to form of transaction, title, legal or equitable interests. The priority regime in the legislation renders the current distinction between priorities based on legal and equitable claims unnecessary.

As a whole, the priority structure is designed to provide fairness and balance between the legitimate interests of secured lenders, unsecured lenders and good faith buyers. The integrated set of rules effectively meets the need for greater certainty in determining the priority position of competing interests.

F. DEFAULT RIGHTS AND REMEDIES

The MPSA will also establish a unified set of rights and remedies applicable on default by the debtor. The default rules specify clear conditions and requirements for repossession, disposal and redemption. The rules depart significantly from current practices in that creditors no longer need have recourse to the courts to enforce their interests. At the same time, the rules are designed to balance creditor and debtor interests in an equitable manner, through introducing a standard of commercial reasonableness in all dealings by the lender with seized collateral.

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The concept of commercial reasonableness includes a requirement to notify all creditors of record and the debtor of the impending disposition; to advertise the impending disposition in the appropriate trade magazines or newspapers or solicit tenders from buyers in the relevant sector; and an obligation to obtain the best value possible for the seized asset upon disposition, under the prevailing circumstances. In recognition of the fact that unanticipated situations may arise, and to prevent abuse, the Courts will be given broad supervisory powers to ensure that the rules operate fairly.

G. INNOVATIVE FEATURES

The MPSA will streamline secured transactions law by recognizing current business practices and by providing sufficient flexibility to adjust with their continued evolution as a more competitive lending environment becomes a reality in Guyana. Particularly innovative features of the MPSA include, at a general level:

• The introduction of a centralized electronic database that will be the single source for recording grants of security interests in movable assets. By giving authorized registrants the ability to register, amend or cancel an initial notice directly into the database from a remote terminal, the information on the registry system is presented to subsequent searchers in real time. This enhances their ability to assess and mitigate their exposure to risk accordingly. The transformation of the registration process is illustrated in Figure 1 (A – C) below.

• The introduction of a comprehensive legislative framework that encompasses all forms of secured transactions, for a wide range of obligations and for all types of movable assets. Not only is the same legislative framework applicable to different forms of transactions, it encompasses the same asset as it transforms through a value chain, and through relationships that shift as a result of the financing arrangements between parties.

o For example, a supplier might have a security interest in a retailer’s inventory. The supplier is the creditor, the retailer is the debtor in that relationship.

o Assume that the retailer sells the asset to a customer pursuant to an instalment plan in the form of a finance lease. If so, under the provisions of the MPSA:

The supplier’s interest automatically shifts to the proceeds of the finance lease, which are receivables and a security interest in the form of the lease;

The customer purchases the asset free of the supplier’s interest, but grants the retailer a new security interest (the finance lease);

The supplier-retailer relationship remains one of creditor-debtor;

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The retailer-customer relationship becomes one of creditor-debtor.

In this scenario:

• the retailer is simultaneously debtor to one party, creditor to another.

• the supplier’s collateral transformed from a tangible asset (the vehicle) into chattel paper (the proceeds of the sale, consisting of a written obligation to repay – a receivable - and a security interest in the form of the finance lease to back that receivable).

• the customer received the vehicle free of the supplier’s security interest, but because the sale was in the form of a finance lease, the customer granted a new security interest in the vehicle they purchased.

From a legal perspective, under the MPSA:

• the supplier – retailer relationship would require one security agreement (a master agreement covering all inventory), and registration of one initial notice to cover all inventory provided by the supplier;

• the proceeds are automatically perfected and enjoy the same priority as the original collateral. Depending upon the actions of the supplier in respect of the proceeds, no new registration would be required;

• the retailer – customer would require one security agreement (the finance lease) and registration of one initial notice.

• The supplier’s right to the inventory on the lot and subsequently the proceeds, would be effective against third parties;

• The retailer’s right to the customer’s vehicle upon default by the customer would be effective against third parties.

Specific innovations include:

• The introduction of “control” as a method of perfecting a security interest in deposit funds or intermediated securities held on account. A security interest that is perfected by control is usually created in the form of a control agreement, a definition of which is included in the MPSA;

• The introduction of a comprehensive priority scheme for determining priority amongst claimants competing for the same assets. The interconnection of a number of commercial transactions involving different parties, as occurs in the example above, is not an issue when it comes to ascertaining the priorities amongst claimants competing for the same asset. Depending upon which party defaults, the answers become obvious under the MPSA priority regime.

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• Equally dependent upon the relationship and the terms of the security agreement are the remedies available to each party. They have options of taking possession and disposing of the collateral with or without judicial process.

• All of these transactions are governed by the same legal framework, the security interests are registered in the centralized registry system, and the MPSA priority regime governs the relationship between competing claimants to the same asset.

Other innovative features include:

• Measures which facilitate inventory, accounts receivable and similar financing arrangements in which the obligation secured fluctuates or the category of collateral revolves. Under the MPSA a financial agreement can secure an interest in inventory which is acquired after the agreement is concluded. These features extend some of the flexibility now contained in corporate mortgage debentures with fixed and floating charges to all business enterprises.

• Related measures which facilitate financing of manufacturing and agricultural inputs. The MPSA will reduce the risk to financiers of manufacturing and agricultural inputs by allowing a security interest to be continued in the resulting processed goods, crops and livestock.

• Measures which facilitate line of credit arrangements. For purposes of determining priority status, future advances under a line of credit agreement will be treated as though they were made when the agreement was originally registered. This will minimize the risk associated with this type of financing.

• A comprehensive regulatory regime governing chattel paper financing. “Chattel paper” is one, or more than one, writing that evidences both a monetary obligation and a security interest in, or a lease of, specific goods. The finance lease mentioned in the supplier-retailer-customer relationship above constitutes chattel paper. It is a common form for suppliers and retailers who extend purchase money to customers and is typically assigned by a retailer to a financing institution, in return for valuable consideration equivalent to the discounted price of the instalment sale.

• Chattel paper is also transferred in structured finance transactions that involve, for example, the rights to receivables in the form of royalties, together with a security interest in the obligor’s assets that generate those royalties. It is therefore relevant to transfers of large pools of receivables and the supporting rights that back the receivables. In recognition that the use of chattel paper as collateral is likely to become increasingly common in Guyana, the MPSA includes registration and priority provisions appropriate to this form of

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financing arrangement.

• The extension of registration and priority provisions to certain transactions that are not traditionally considered security agreements. These include long-term leases, conditional sales, consignments and outright transfers of accounts. Because these are not registered at present, there is the potential for third party deception. The MPSA will rectify this problem.

• The introduction of a "purchase money security interest" ("PMSI") which will balance the power between lender and debtor, by preventing over-securing by the lead lender. By preventing lead lenders from over-securing, the PMSI super-priority allows debtors to use their surplus equity for business expansion. The PMSI also provides an essential counter to after-acquired property clauses and to future advance clauses containing no stated maximum.

• Technological innovations at the Commercial Registry will facilitate the inclusion of a limited number of non-consensual liens in the registry system, and therefore the MPSA provides for direct registration of the rights of judgement creditors. The registered interest of a judgement creditor will take priority over unperfected security interests and enhance creditors’ ability to conduct risk assessment.

H. REPEAL OR AMENDMENT OF EXISTING LEGISLATION

Although the MPSA does not specifically abolish the existing security devices, it does provide a comprehensive code for registration, priorities and remedies upon default based on the substance of a transaction. If in substance the transaction creates a security interest, then it is covered by the MPSA. Therefore, existing legislation dealing with security devices is redundant.

Accordingly, the MPSA will replace the following Acts in whole or in part as required to achieve the new Act’s objectives:

The Companies Act

The Deeds Registry Act

The Bills of Sale Act

The Pledge of Goods Act

The Agriculture Loans Act; and

The Livestock (Loans for Development) Act.

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FIGURE 1A: THE EXISTING COMMERCIAL REGISTRY PROCESS, GEORGETOWN:

Company charges, mortgage debentures and bills of sale.

Company charges and mortgage debentures:

• Company charges / mortgage debentures are published in The Official Gazette and a daily newspaper at least 7 days prior to lodging at the Commercial Registry.

• After publication in the Gazette, the instruments that created these security interests are lodged with the commercial registry. Additionally, a statement of the particulars of the charge, an attestation authenticating the identity of the parties and their signatures, and evidence of payment of the appropriate fee are lodged.

• A registration number, date and time are ascribed to the registration, and the charge / debenture is entered into an electronic database by data entry clerks in the Commercial Registry. The instruments that created the charge/debenture, along with the affadavits, are uploaded as attachments into the system.

Bills of Sale:

• The bill of sale is lodged with the registry, along with the document of attestation. • It is registered by manual process – that is, a hardcopy of the documents is archived - and a data entry clerk

adds the grantor/grantee names and addresses to an electronic index, along with the registration number, date of registration and item secured.

• Within 28 days of registration, the Commercial Registrar publishes a notice of registered bills of sale in The Official Gazette.

Finance lease and hire-purchase agreements

• These are not registered.

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FIGURE 1B: THE EXISTING SUB-REGISTRIES – VREED-EN-HOOP & NEW AMSTERDAM:

Company charges, mortgage debentures and bills of sale

Company charges, mortgage debentures and bills of sale:

• The same process as described above (Georgetown Commercial Registry) is followed at the sub-registries.

• However, the two sub-registries are manual not electronic, and they use a different numbering system for corporations. Therefore, the three databases cannot be combined; the information is not centralised onto one database.

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FIGURE 1C: A CENTRALIZED COMMERCIAL REGISTRY FOR MPSA SECURITY INTERESTS

The Commercial Registry - MPSA Charges:

• A broader range of security interests will be registered, including finance leases, hire-purchase agreements, and outright sales of receivables;

• Authorized registrants will have remote access capability and can enter, amend or cancel notice of their security interests in the prescribed form;

• The notice entered on the database is comparable to notices of bills of sale published by the Commercial Registrar in The Official Gazette;

• As with current published particulars of company charges and debentures, a short form description of secured assets suffices. Under the MPSA the short forms are broader in generic category than the current descriptions.3

3 The generic definitions of categories of collateral under the MPSA are broader than descriptions currently used in debentures. For example: “stock-in-trade, goods, wares and merchandise” are all “inventory”; “equipment, furniture, fittings, utensils, tools, implements” are all “equipment”. The defining distinction is whether the assets are held by the debtor for sale or lease (“inventory”) or not (“equipment”). “Book and other debts, actions and choses-in-action, trade name, trade rights, licences, liens” are all “intangibles”. In the initial notice, a description such as “all movable

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I. MPSA: CONSTITUENT PARTS

This Bill provides for an integrated legal framework for consensual secured transactions in movable property. In reviewing it, one should bear in mind that it is a comprehensive legislative framework that encompasses and integrates all security interests in movable assets. As a result, at first glance it can be overwhelming: it is a complete “code” in this area of law.4 Codes of this nature not only include all secured transactions within their scope, they have an internal logic that applies to those transactions.

PART I: PRELIMINARY

In this Bill, all secured transactions in movable property that secure payment or performance of an obligation give rise to a security interest, regardless of the form of the transaction or the relationship of the parties to the transaction, and regardless of the type of asset.

This integration permits all security interests to be rendered effective against third parties by using three methods of publication –registration, possession, or control. There is an integrated set of priorities that comprehends all forms of secured transactions; and there are common enforcement provisions. Consequently, the form in which a secured transaction occurs is irrelevant, as is the location of title throughout the transaction.

The Bill applies to all secured transactions in movable property, with a few exceptions.

Integration of possessory security rights:

Registration of a possessory security interest – a pledge - is not required in this Bill. A secured creditor’s possession of a debtor’s asset is itself a form of publicity without the need for registration because, at common law,

assets now owned or hereafter acquired” would suffice to cover all these itemised categories, and the creditor would check boxes labelled: “equipment”; “inventory”; “intangibles”; or “other”.

4 Legal codes are compilations of all, or a significant amount of, a particular jurisdictions law in a given area. So, for example, a Civil Code compiles all, or a significant amount of, a particular jurisdiction’s rights between individuals and the State; between individuals; and between an individual and property. A Criminal Code compiles all, or a significant amount of, a particular jurisdiction’s criminal law. A Code of Civil Procedure does the same for procedures in civil courts.

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possession raises a presumption of title to property. Therefore, when an asset is pledged the creditor is presumed to have title.

The scope of the current draft of the Bill encompasses both categories of secured transaction in movable property – possessory and non-possessory.

Integration of control agreements:

A third category that creates a security interest has emerged in commercial practice over the last three decades. That is the concept of “control”. Control agreements consist of a tripartite agreement between a secured creditor, a debtor and a third party who has control over a debtor’s asset. A tripartite agreement between a secured creditor, a debtor and a financial institution that holds the debtor’s funds in a deposit account are one example of a control agreement.

PART II: ADMINISTRATION

Part II deals with the establishment of the registry system for the Bill. Currently, some forms of non-possessory secured transactions are registered at the Commercial Registry. Other important forms, such as finance leases, are not registered.

The Secured Transactions Registry is a “notice-filing system”. Conceptually, it is similar to the publication of information in The Official Gazette or local newspapers, in that a notice of registration of a security interest and some of the particulars are registered, but not the entire details of the security agreement. In the case of the Secured Transactions Registry, creditors file an initial notice on a web-based system to publish notice of their security interest to third parties. In a notice-filing system the creditor bears the burden of ensuring that the instrument creating the security right is valid, and that the security right is validly registered.

The registrar’s role is confined to supervision and administration of the registry office and database, drafting regulations that ensure the smooth and accurate operation of the system, and dealing with policy issues as they arise. Registry officials are not involved in the registration of initial notices or amendment notices.

Because creditors enter information on a web-based electronic database, the registry should render information in real time, without a gap in information. All security interests should be discoverable from the moment they are entered on the system.

The creditor is the party who has most to gain from the registration, and conversely, most to lose from invalid attachment and registration. Therefore, it is in the creditor’s best interest to ensure that the relevant information is correct. This shift in burden relieves the registrar – and hence, the Government – of liability for incorrect filings.

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Notice-filing systems also permit advance filing. This eliminates the effect of lag time between the moment a secured party agrees to extend credit to a debtor, and the signing of the security agreement. As discussed below, provided that a security agreement is signed eventually, priority ranks from the moment of registration.

PART III: CREATION OF A SECURITY INTEREST – THE SECURITY AGREEMENT

Two components are necessary to render a security agreement effective against third parties:

1) the creation of a valid security interest; and

2) its publication, either by possession, registration or control.

A security interest that is effective against third parties is referred to in many jurisdictions as a “perfected security interest”, and that is the terminology used in this Bill.

This Part provides for the creation of a security interest, which is referred to as “attachment”. Attachment occurs by mutual consent, often – but not always - in the form of a written agreement (the “security agreement”).

The security agreement is the controlling element in the contractual relationship between the secured party and the debtor.

In some instances, writing is not necessary for attachment. The absence of a written agreement occurs most often with possessory security interests, for example where a secured creditor possesses negotiable documents of title such as a bill of lading.

A negotiable document of title is not in and of itself a written security agreement. Rather, at law, possession of the negotiable document constitutes attachment and possession, valid until the amount owed to the creditor by the consignee is paid. Consequently, where a secured party possesses a negotiable document of title, creation of the security interest and its effectiveness against third parties are simultaneous and a perfected security right is created without the necessity of a written security agreement.

As a result, the necessary elements for attachment contemplate situations where:

1) there is a signed security agreement;

2) there is no security agreement and instead, the secured party has possession of the collateral – usually represented by a document of title, an instrument, a certificated security or an assignment in writing; and

3) a control agreement, which is a special form of security agreement.

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PART IV: PERFECTION OF SECURITY INTERESTS

The term “perfection” is equivalent to the phrase: “effective against third parties.” As stated above, “attachment” means that a security agreement is binding between the parties. In contrast with attachment, perfection means that the security agreement is binding against third parties.

Achieving perfected status means that a secured party has obtained the greatest bundle of rights under the Bill with respect to competing claims in the same collateral. It is not possible to be in a better priority position.

That does not necessarily mean that a secured creditor will have priority over all competing claimants. The priority of a perfected security interest depends on the priority rules of this Bill and other legislation.

For example, in some jurisdictions a perfected security interest does not necessarily have priority over employees’ wages, pension contributions, taxes, and similar source deductions. Those claims often override the claim of a perfected, secured creditor. Similarly, a claim for materials and services overrides any perfected secured party’s claim, pursuant to section 39 of this Bill.

The fact that a security interest is perfected means that it enjoys the highest priority available to a security interest under this Bill, given the circumstances, and it indicates that the secured party has a right in rem in the collateral. Indeed, the steps necessary for the creation of a “perfected security interest” refer to the creation of a right in rem in a debtor’s collateral; that is, the creation of a property right in a debtor’s assets that, through public notice, becomes effective against third parties.

“Perfecting” a security right, therefore, refers to taking the steps necessary to convert a personal obligation that is binding between the parties into an obligation that is binding against third parties (that is, creating a right in rem).

PART V: SECURITY INTERESTS IN MOVABLE PROPERTY

Part V contains provisions dealing with specific types of security interests, or that apply to security interests in movable property in specific circumstances. Some of these provisions in this Part confirm that a security agreement may provide for after-acquired property and proceeds, and that perfection of the security interest in these categories is automatic. Others provide for situations where a bailee or carrier relinquishes possession of a negotiable instrument or document of title to facilitate sale of the collateral by the debtor. The security interest remains perfected for a temporary period, notwithstanding the fact that the secured party has relinquished possession of the instrument or document. These provisions result from the integration of possessory and non-possessory security interests under the Bill.

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PART VI: PRIORITY BETWEEN SECURITY INTERESTS

The statutory priority rules in Part VI determine the rights among competing claimants.

The general priority rule is based on time and date of registration, or possession. As such, it is based on a factual event that can be easily proven.

Priorities are not based on the form of a transaction; nor are they based on locus of title, such as in a conditional sale transaction or a finance lease. These inquiries are rendered unnecessary by section 2 of the Bill (“Application”) when the emphasis shifted away from the form of a transaction, or locus of title, or type of collateral, to these priority rules. The provisions of this part are a corollary to section 2. Integration of a wide variety of forms of secured transactions is made possible through these statutory priority rules, which essentially reproduce the outcome of the current priority rules, in a much more straightforward manner.

The priority rules in this Part also contemplate the commingling or transformation of secured assets as they move through a value chain. This Part also contemplates subordination agreements, in which a prior creditor agrees to subordinate its interest to a subsequent creditor, such as might occur on a merger or company arrangement.

PART VII: SPECIAL PRIORITY RULES

Section 2 excludes liens given by statute or rule of law from the scope of the Bill. Section 39 is an exception to this principle, in that it provides a priority rule for a lien created through the furnishing of materials or services to goods. By so doing, section 39 creates a statutory lien for situations that, prior to this enactment, were common law liens.

The lienholder usually enhances or preserves the value in the collateral, through restoring its functionality. This priority provision acknowledges the value added to an asset through furnishing of materials or services.

This Part also covers transactions that are frequent in the commercial market, and that in general have their own set of rules, such as the rights of holders in due course. These rights are essential to the smooth flow of commerce, and therefore provisions in this Part provide for a statutory override of a security interest in specific circumstances.

PART VIII: REGISTRATION

This nature of the new notice-filing registry system is explained in detail above, and examples are provided below. Accordingly, there is no need for further comment here, other than to note that the form of the user interface will need to be determined, and regulations drafted. The relevant categories of authorized registrants should be determined through extensive discussion with local stakeholders.

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PART IX: ENFORCEMENT OF SECURITY INTERESTS

Part IX deals with default rights and remedies. Five principals are embedded in this Part:

1. In accordance with the concept of freedom of contract, the parties can define their own rights and obligations concerning events of default, and the consequences. However, the parties cannot waive certain provisions in this Part, namely those that ensure adherence to the following 4 principles:

a. The main objective in this Part is to dispose of the collateral as soon as possible after seizure. Unlike immovable property, movable property generally depreciates rapidly. If there is a dispute over the process, then it should be litigated post-disposition, after the proceeds of disposition are paid into Court.

b. The disposition of the asset should be done in a manner that will obtain the best value possible, under the prevailing circumstances. This may mean that the value is low in a situation where market conditions are not optimal. However, provided the appropriate process has occurred to ensure the best value under those conditions, a disposition will be “commercially reasonable”. Private rather than public sale might obtain the best price, and therefore non-judicial enforcement is included as a remedy.

c. It is in the interest of other creditors – and the debtor - to monitor the disposal of the asset by the seizing creditor. They have the most to lose from an improper disposition. Monitoring by these parties is generally more efficient than other forms of monitoring. If the interested parties are involved in monitoring, then the provision of the Bill regarding method of disposition should be neutral – under these circumstances, it should make no difference whether the method is by public or private sale or agreement. Accordingly, proper notice provisions and time periods are incorporated into the disposal process, so that the interested parties have adequate opportunity to monitor the disposal of the collateral.

d. Once the proceeds of disposition are obtained, there are provisions in this Part for their distribution, in accordance with the priorities established in Parts VI and VII, and for a statement of account by the disposing party.

PART X: GENERAL

There is no commentary for this Part. It needs to be reviewed for conformity to the laws and customs in Guyana and discussed before commentary is inserted.

The only exception is Section 88, which is standard in notice-filing systems. It provides that a debtor may request a secured party to send or make available to any specified person, a summary of the security agreement, or a statement

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in writing of the amount of indebtedness and terms of payment, or a statement of account indicating the amount needed to extinguish the security interest.

This provision is the method through which a subsequent party, as potential creditor, learns the information that they need to know to make an assessment about the extent of a prior creditor’s interest and claim in the debtor’s movable assets. It is a corollary to the concept of a notice-filing system. Rather than lodge the security agreement with the registry, subsequent parties, as agent of the debtor, can acquire that knowledge directly from a prior creditor.

PART IX: REPEALS AND TRANSITIONAL PROVISIONS

This Part provides for the repeal of Acts or parts of Acts that will be rendered redundant once the MPSA is implanted. Ironically, some of these Acts appear to have fallen out of use in Guyana, so their repeal should not be an issue.

The transition provisions in this Part provide for a number of circumstances:

• Prior security interests that were enforceable against third parties under prior law continue to be enforceable under the MPSA;

• A prior security interest that was registered immediately before the commencement of the MPSA would be deemed to be perfected by registration under the MPSA;

• A prior security interest that was not registered immediately before the commencement of the MPSA, but which had priority over other security interests would be deemed to be perfected by registration under the MPSA;

• A transitional period – yet to be determined but typically between six to twelve months in most jurisdictions - is set. During this period prior security interests that were registered under prior law, or not registered but perfected, must come onto the new registry system. At the close of the period, security interests that should have been registered, but are not, will become unperfected.

• Some population of the new registry system will occur automatically. In other cases, the secured creditor will need to actively register their interests. Finance leases and conditional sales are one such example of unregistered but perfected interests. Discussions will need to occur to see that these interests are integrated into the registry system in a manner that does not unduly inconvenience the lessors and unpaid sellers.

J. CORE QUESTIONS AND RELEVANT SECTIONS:

Despite its apparent complexity, at its core the MPSA has specific sections that come into play with almost every form of secured transaction. It would be helpful if those who are reviewing the draft MPSA keep the following core questions and relevant sections in mind.

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Assume that a prospective creditor wishes to make a loan or a sale on credit to a person, and the debtor is an individual or a business entity. The following questions lead through the decision process in assessing transaction risk.

1. Regardless of its form, is the transaction within the scope of the MPSA?

• Section 2(1)(b) provides that if the transaction secures payment or performance of an obligation, then it is within the scope of the MPSA.

• It might be in the form of a bill of sale, a company charge, a mortgage debenture, a finance lease, or an assignment of receivables by way of security, to name a range of transactions. Form is irrelevant – it is the functional purpose of the transaction that matters.

2. How do the parties create a security interest?

• Section 13 provides minimum requirements for creating a security interest. The threshold is low, and the wording of the current agreements used for creating secured transactions in Guyana would meet those requirements.

o An affadavit of bona fides is not necessary.

• Assuming:

o the debtor has sufficient rights in the collateral;

o consideration is given; and

o a written agreement exists, containing a description of the collateral sufficient to identify it, signed by the parties, the agreement would create a valid non-possessory security interest.

o An oral agreement with possession by the creditor would create a valid possessory security interest.

o A control agreement would create a valid security interest in deposit funds and other funds held on account.

3. How does the secured creditor create a real right in the collateral - that is, a security interest that is effective against third parties?

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• Section 14 provides that a perfected security interest requires two elements:5

a) creation of the security interest (above, section 13); and

b) using one of three methods available under the MPSA to publicize that interest:

o Section 14(1)(b)(i): registration of an initial notice in the Commercial Registry; o Section 14(1)(b)(ii): the creditor taking possession of the collateral; or o Section 14(1)(b)(iii): the creditor enters into a control agreement.

• Section 47 provides the procedure, and the information required, for registering an initial notice in the Commercial Registry.

4. What is the priority of that security interest against claimants competing for the same assets?

• Section 24 provides the general priority rule: o between competing claimants, each of whom has a perfected security interest, the first to

publicize their interest has first priority, regardless of the method of publicity used.

5. What exceptions are there to the general priority rule?

• Section 28 is one of the main exceptions. It provides that a purchase money security interest (a “PMSI”), as defined in section 3, takes priority over all other competing claimants, prior and subsequent to the perfection of the PMSI interest, provided certain conditions are met.

o One of those conditions is that the PMSI party has notified all prior secured creditors of record of its intention to take a PMSI in specific collateral, before the debtor takes possession of that collateral.

o This exception functionally replicates the current law where a PMSI party, such as a finance lessor, has a claim competing with a prior registered party with a fixed or floating charge.6

6. What enforcement rights are available upon default by the debtor?

5 “Perfecting an interest” refers to the steps necessary to make a security interest effective against third parties.

6 Other overriding interests include the interest of a registered judgment creditor, the interest of a party who has a common law lien for materials and services they provided, and the rights of a party who purchased collateral from the debtor in the ordinary course of the debtor’s business.

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• Part IX (sections 64 to 86) provide the enforcement procedures, and the rights and obligations of each of the parties.

• Section 65 provides that, upon default, a secured creditor may take possession of the collateral, or proceed by judicial process.

• Section 72 provides that the secured party may dispose of the collateral by auction, public tender, private sale or any other method as may be provided in the security agreement.

• Other provisions within Part IX provide safeguards to ensure that the best available value is obtained for the collateral, under the prevailing circumstances, and provide that the disposing creditor must render a statement of account to the debtor, and to the other creditors.

K. APPLICATION TO SECURED TRANSACTIONS

With these core concepts in mind, it might be useful to review some of the basic secured transactions that occur in Guyana, and the relevant provisions of the MPSA for each. In this section we will review transactions involving a chattel mortgage (bill of sale); a finance lease; a company charge over a revolving category of inventory or accounts receivable; and an outright transfer of receivables.

1. A BILL OF SALE SECURING AN INTEREST IN A MOTOR VEHICLE.

• Section 2 provides that a bill of sale transaction is within the scope of the Bill, because it “in substance creates a security interest”.

• Section 3 defines security interest as “…a property right in movable property that is created by agreement and secures payment…”

• Section 3 also defines “collateral” as movable property that is subject to a security interest.

The Bill applies.

• Section 14 provides that a security interest is “perfected” when: o it is created; and o an initial notice is registered in respect of the security interest.7

7 “Perfected security interest” is defined in section 3 as a security interest that has been created and is made effective against third parties by…registration (in this instance).

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• Section 13 provides the requirements for creating a valid security interest. Essentially, a document drafted

in the current prescribed form of a bill of sale, signed by both parties, would suffice. An affidavit of bona fides is not required.

• Section 47 provides that a person – in this case, an authorized registrant – can register the security interest in the Commercial Registry by filing an initial notice. The information in that initial notice is comparable to the information seen in the notices of bills of sales published by the Commercial Registrar in The Official Gazette. For example, the notice would contain:

o the debtor’s and the secured creditor’s unique identification numbers, names and addresses; o the type of asset secured, described by category (“inventory”, “equipment”, “consumer goods”,

for example); o because the asset is a motor vehicle, the chassis number and engine number should be included,

along with a specific description of make, model, colour, year and any other relevant information.

Accordingly, a signed security agreement in the form of a current bill of sale, duly registered through submission of an initial notice, would perfect the secured creditor’s security interest in the motor vehicle.

• Section 17 provides that a security interest in collateral that is disposed of continues in the collateral, unless the secured party authorises the dealing, and extends to the proceeds.

• Accordingly, should the chattel mortgagor sell the asset without the secured creditor’s permission, the purchaser would acquire the vehicle subject to the security interest.

Upon default by the debtor, the security interest would be effective against third parties with competing claims in the vehicle.

Against competing claimants, the priority of the secured creditor would depend upon the priority provisions of the MPSA.

• Section 24 provides the general priority rule: assuming the contest is between two creditors who perfected their security interest by registration, the first to register has first claim.

• Assuming the secured creditor mentioned above was the first to register, it has first claim to the full extent of its claim, plus interest and costs.

• If the inverse were true, and the secured creditor is the second-ranking registrant, then they would have a right to the surplus only, if any, after the first claim was satisfied.

Assuming the secured creditor has first priority to the collateral:

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• Section 64 provides that where a debtor is in default, the creditor may take possession of the collateral, or they may proceed under judicial process.

• Section 69 provides that the secured party may dispose of the collateral. • Section 70 provides that, in disposing of the collateral, the secured party has a duty to obtain the best price

reasonably obtainable at the time of sale. • Section 72 provides that the sale may be by auction, public tender, private sale or any other method as may

be provided in the security agreement. • Section 73 provides that a creditor disposing of collateral must provide notice to all creditors of record –

meaning all those registered in the Commercial Registry - at least ten working days before the disposition. This allows the other creditors to monitor the sale, or if they expect that the sale price will be too low, to exercise their right to redeem the collateral, as provided in section 84.

Once disposition has occurred, the disposing creditor must pay any surplus to the next creditor in priority, or they have the option of paying it into court. They must also submit a statement of account to the other creditors of record, and to the debtor.

2. A FINANCE LEASE SECURING THE UNPAID PURCHASE PRICE ON A VEHICLE.

The same provisions described above would apply, with a few important exceptions:

• the transaction would fall within the scope of the Bill; • the creation of the security interest would be the same, although the form of the instrument would be a

finance lease, not a bill of sale; • once created, the step necessary for perfection would be the same – that is, filing an initial notice in the

Commercial Registry database; • as with the chattel mortgage, a sale of the asset by the debtor without the consent of the secured party

would not release the debtor from their obligation and would allow the secured party to follow the asset into the hands of the purchaser;

• the remedies available to the lessor upon default would be the same as described above.

The essential difference is the priority of the finance lessor. They provide purchase money for the asset, which qualifies their interest as a “purchase money security interest” under section 3 of the MPSA.

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• Section 3 of the MPSA defines “purchase money security interest” as “…the interest of a lessor of goods for a lease for a term of more than one year.” 8

• Section 28 provides that a purchase money security interest has priority over a non-purchase money security interest in the same collateral given by the same debtor if the security interest is perfected within ten working days after the debtor obtains possession of the collateral.9

• Therefore, the lessor would have first priority in the vehicle, to the extent of the purchase money owed at the time of default, plus interest and costs.

This outcome, from a functional perspective, replicates existing law in Guyana. The difference under the MPSA is that the outcome is created through a special priority, rather than through an emphasis on ownership. Importantly, the finance lease transaction is integrated into the MPSA, and therefore it would appear as a registered interest on the Commercial Registry. Currently, finance leases are unregistered interests in Guyana.

3. A COMPANY CHARGE IN A CIRCULATING COLLATERAL.

The same provisions described above for the previous two transactions would apply, with a few important exceptions.

• the transaction would fall within the scope of the Bill; • the creation of the security interest would be similar, although in a transaction of this nature the form of

the instrument creating the security interest – the security agreement - would be customized to the needs of the client, with specific terms and conditions inserted to protect the client’s interests. That agreement would be similar to the type of agreement used today for creating a floating charge over a revolving pool of assets.

• The description of the inventory in the security agreement would be similar to the wording currently used by secured creditors in Guyana. For example, it might read:

• “All present and future inventory of the Borrower, including all raw materials, materials used or consumed in the business of the Borrower, work-in- progress, finished goods, goods used for packing, materials used in the business of the Borrower not intended for sale, and goods acquired or held for sale or furnished or to be furnished under contracts of rental or service, and all movable property in any form derived directly or indirectly from any dealing with the collateral subject to the security interest or the proceeds therefrom.”

8 A purchase money security interest party need not be a lessor. The definition in section 3 includes other types of secured creditors.

9 This scenario assumes the collateral does not constitute “inventory”, which is a defined term. The priority rules for inventory are slightly different. In order to obtain a super-priority over prior registrants, a secured creditor claiming a purchase money security interest in inventory must give notice to prior registrants before the debtor obtains possession of the collateral. As a matter of business practice and the terms of their security agreement, prior registrants have a number of options available to them at that time.

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• once created, the step necessary for perfection would be the same – that is, filing an initial notice in the Commercial Registry database.

• The description of the assets in the security agreement would not be the same as the paragraph above, used in the security agreement. A description of the collateral secured as: “all inventory now owned or hereafter acquired, and the proceeds from the disposition of that inventory” would constitute sufficient notice to other creditors.

• section 46 provides that a buyer of goods who buys them in the ordinary course of business takes the goods free of the security interest. This is the classic marché ouverte principle that currently prevails in the common law of Guyana.

• the remedies available to the lessor upon default would be the same as described above.

4. AN “ALL-ASSET” DEBENTURE PURSUANT TO SECTION 234 OF THE COMPANIES ACT.

The process would be the same as the immediately preceding process for creating a company charge. In this instance, the same security agreement could create a mortgage over immovable property under the Deeds Registry Act or the Land Titles Act, as the case may be, and an MPSA security interest over all movable property, presently owned and acquired in the future.

• Section 13(1) provides that the parties must sign an agreement that contains inter alia a description of the collateral that reasonably enables the collateral to be identified.

• With regard to movable property, section 13(2) provides that a description of the collateral satisfies the standard in subsection (1)(a) if the description indicates that a security interest is taken in:

(a) all the debtor’s movable assets, or in all the debtor’s movable assets within a generic category; or

(b) a security interest is taken in all of the debtor's present and after-acquired property; or

(c) a security interest is taken in all of the debtor's present and after-acquired property except for specified items or kinds of movable property.

• Accordingly, the description of the collateral in the security agreement: o would describe the relevant immovable property by lot or parcel, with an attached plan and

description of relevant buildings; o could describe the movable property collateral as “all the debtor’s present and after-acquired

property”. • Out of an abundance of caution, most secured creditors describe the movable assets in an all-asset

debenture by generic category, with brief all-inclusive descriptions of the types of assets within each category.

• Certainly, at the level of registering an initial notice, it would be sufficient to describe the collateral as “all of the debtor's present and after-acquired movable property”.

• To this extent, the same security agreements currently used to create all-asset debentures in Guyana could continue to be used.

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• The relevant priority provisions in the MPSA for each generic category of asset would determine priorities. Assuming the secured creditor is first to register, then the main party who would rank ahead of them for tangible assets, and perhaps receivables – depending upon the facts - would be a secured creditor holding a PMSI.

• Sections 42 and 43 govern priorities in the negotiable instruments, documents of title, chattel paper and security certificates.

5. ASSIGNMENT OF RECEIVABLES BY WAY OF SECURITY AND OUTRIGHT TRANSFERS OF RECEIVABLES.

• Section 2(1)(b) expressly provides that assignments of receivables are within the scope of the MPSA; • Section 2(1)(d) expressly provides that an outright assignment of intangibles is within the scope of the

MPSA, and the definition of “intangible” in section 3 includes receivables. • Therefore, an assignment of receivables by way of security, and an outright transfer of receivables are

within the scope of the MPSA. • The definitions in section 3 expressly include a transferor of a receivable in the definition of a debtor, and

a transferee in the description of a secured party, and therefore transferor and transferee have the rights and obligations of debtor and secured party respectively.

• The same provision noted above applies to the creation of the security agreement or, in the case of an outright sale, the sale and purchase agreement.

• The registration requirements would be the same as above, for registering an initial notice in the Commercial Registry.

• Section 29 provides for the priority of a transferee of accounts over a PMSI party in certain circumstances. • Section 43 provides the usual defences available to account obligors, prior to the account obligor receiving

notice of the transfer. • Section 64(1) expressly provides that the enforcement provisions of the MPSA do not apply to outright

transfers of receivables. The transferor and transferee in an outright transfer of receivables are brought in as deemed debtor and secured party in the definition sections, so that they may proceed with registration of an initial notice, and so that they may take advantage of the priority provisions.

• Section 67 provides that a secured party who has taken an assignment of a debtor’s receivables by way of security may notify the account obligors and collect and apply the receivable in satisfaction of the obligation secured by the security interest.

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L. CONCLUSION

The legal framework for secured lending on movable assets in Guyana has, until now, been a complex mix of statutes and common law, consisting of registered and unregistered interests. Despite the introduction of technology into the Commercial Registry, procedural legacies have prevented optimization of its capacity. Significant lag time and possibility for human error remains. The complexity of the legal and institutional framework creates unpredictable priorities and increases risk for creditors. Judicial enforcement entails significant delays and dilatory procedures, further increasing risk and depreciating value for the secured creditor.

The MPSA integrates all forms of security interests into one harmonious system, including chattel mortgages, company charges and debentures, assignments and outright transfers of receivables, finance leases, conditional sales and pledges.

Authorized registrants with direct entry and remote access, motived by their own best interests, will ensure that registrations, amendments and cancellations are presented in real time with minimal margin for error. Information from the two sub-registries will be amalgamated into the central database, thereafter allowing any searcher throughout the country access to information via the internet.

Publicity through registration, possession or control agreements ensures that all commercial and consumer encumbrances in movable property are discernable. An integrated priority regime increases predictability. Efficient out-of-court enforcement increases the possibility of a creditor obtaining the best value for the collateral, under the prevailing circumstances. Enhancing risk assessment, risk management and mitigation for creditors should facilitate access to finance for a broader range of business enterprises and consumers.